Uncertainty-driven cooperation

Doruk Cetemen, Ilwoo Hwang, Ayça Kaya

Research output: Contribution to journalArticlepeer-review

1 Scopus citations

Abstract

We consider dynamic team production in the presence of uncertainty. Team members receive interim feedback that depends on both their current effort level and the project's uncertain prospects. In this environment, each member can encourage the others by making them more optimistic about the project's prospects. We study the extent to which this incentive counters the usual free-riding incentive. Restricting the agents' access to feedback can increase their equilibrium effort levels by mitigating the ratchet effect. In this case, using joint performance measures can be beneficial even when individual measures are available.

Original languageEnglish (US)
Pages (from-to)1023-1058
Number of pages36
JournalTheoretical Economics
Volume15
Issue number3
DOIs
StatePublished - Jul 1 2020

Keywords

  • C72
  • C73
  • D23
  • D83
  • Team production
  • free-riding
  • learning
  • uncertainty

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

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